Zero

Half of the world´s government bonds yield less tan 1%, according to a recent bank study.

The apparently “safe” money is close to giving you zero return. People will continue to buy these bonds, for a while at least, driving yields further down. We live in a world where Rwanda´s bonds are 10 times oversubscribed. Welcome to History.

This is paradoxical for many reasons. A lot of those governments are in pretty bad shape, economies are not growing, unprecedented monetary expansions should generate inflationary expectations, we see sovereign bond investors getting killed via haircuts and court decisions, it´s the private sector that we should be trying to bump up, etc etc etc.

Welcome to a world where no asset is seen as risky anymore. The “lust for yield” caused by those paltry official sector yields makes people kneel at the altar of anything promising something closely resembling a return.

Welcome thus to CoCo-Land, with people buying securities with triggers that can´t (as in cannot) be understood or ascertained by outsiders.

Welcome to a world where Greece (as in Greece) can say that it will be back in the capital markets next year.

Welcome to Zero.

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